Why Companhia Siderurgica Nacional (SID) Is Up Today

NEW YORK (TheStreet) -- Companhia Siderurgica Nacional (SID) is surging on Friday after its board of directors authorized a new share buyback program.

By midafternoon, shares had climbed 14.7% to $4.18.

Trading volume of 8.7 million had exceeded its three-month daily average of 5.7 million.

The Sao Paulo-based steel company said it will repurchase up to 70.2 million shares from March 14 to April 14.

In a statement, the company said the buyback's objective is to "maximize the creation of value to shareholders by means of an efficient capital structure management."

Companhia currently has 1.46 billion shares outstanding.

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TheStreet Ratings team rates COMPANHIA SIDERURGICA NACION as a Hold with a ratings score of C. The team has this to say about their recommendation:

"We rate COMPANHIA SIDERURGICA NACION (SID) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 39.99% is the gross profit margin for COMPANHIA SIDERURGICA NACION which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -13.88% is in-line with the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, COMPANHIA SIDERURGICA NACION has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Net operating cash flow has significantly decreased to $299.69 million or 69.19% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 247.7% when compared to the same quarter one year ago, falling from $165.67 million to -$244.66 million.

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